Digital currencies promise to change the landscape of our global financial systems. The on-going currency wars, in which China has bet on its Digital Currency/Electronic Payment (DC/EP) makes that clear.
But, beyond the China-US split, what could the fallout of the launch of digital currencies be in Europe?
We've released our latest report, “CBDCs: Geopolitical Ramification of a Major Digital Currency”, covering the current political landscape of payments, where the Euro currently falls, and how a digital Euro, a digital Yuan, and private stablecoins could affect all of this.
Based on the overview, we predict that:
- A digital Yuan will not unseat the Dollar.
- CBDCs will have to play nice with private stablecoins.
- Three to five nations globally will completely replace their currency with a CBDC by 2030.
- Smaller nations will consider a switch to the digital Dollar.
- The Euro will be overtaken by the digital Yuan if Europe has no CBDC by 2025.
Digital currencies are actively being explored, and increasingly viewed as a necessary step to retain relevance in global financial markets. And, with the US Dollar so firmly cemented in the first place, with over 57% of reserves held in dollars, the Euro must secure its position in second. Especially as there are only 18% of reserves held in euros, the risk of being pushed out of prominence is great if a digital currency quickly eats up the market share to the second position.
With most reports focused on the technical aspects of CBDCs, it is time to look at how digital payments could change our global financial ecosystem, and take steps to pave the way to a strong European future. The full report is available here, and as always, free.
